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Communication and disclosure to participants

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[Opinion] Comments to FASB on Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715) and Changes to the Disclosure Requirements for DB Plans (Subtopic 715-20)
Links to the text of comment letters submitted to FASB by 27 firms, including Willis Towers Watson, AT&T, CNA Financial Corporation, BB&T Corporation and FedEx Corporation. (Financial Accounting Standards Board [FASB])
Text of HHS Press Release: Administration Increases Transparency for Consumers Shopping for Health Insurance Coverage
"The rules enhance the consumer shopping experience in a number of ways. For example, health insurance issuers must provide online access to a copy of the individual coverage policy for each plan or group certificate of coverage. And these documents must be made publicly available to all potential consumers prior to when a consumer applies, so they are clearly informed about what a plan will and will not offer. The final rules make few changes to the rules proposed in December 2014. In continuing the goal of providing clear and straightforward information to consumers about health plans available in their area, health insurance issuers and group health plans must still provide a brief SBC that includes coverage examples and a uniform glossary to consumers." (Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS])
[Guidance Overview] Text of HHS Fact Sheet: Summary of Benefits and Coverage and Uniform Glossary Final Rule (PDF)
"The December 2014 proposed rules included proposed revisions to the SBC template, instruction guides, uniform glossary, and other supporting materials.... The Departments anticipate the new template and associated documents will be finalized by January 2016, and will apply to coverage that would renew or begin on the first day of the first plan year (or, in the individual market, policy year) that begins on or after January 1, 2017 (including for coverage beginning on or after January 1, 2017, for which open enrollment occurs in the fall of 2016)." (Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS])
[Official Guidance] Text of Final Regulations: Summary of Benefits and Coverage and Uniform Glossary
98 pages. "On December 30, 2014, the Departments issued proposed regulations ... as well as a new proposed SBC template, instructions, an updated uniform glossary, and other materials ... The Departments received many comments on the proposed changes to the template and associated documents but received very few comments relating to the regulations. As stated in the FAQ issued on March 30, 2015, the Departments anticipate the new template and associated documents will be finalized by January 2016, and, therefore, only the comments on the regulations will be addressed in this final rule. Comments relating to the template and associated documents will be addressed when those documents are finalized...."

"The December 2014 proposed regulations proposed that these rules, if finalized, would apply for disclosures with respect to participants and beneficiaries who enroll or re-enroll in group health coverage through an open enrollment period (including re-enrollees and late enrollees) beginning on the first day of the first open enrollment period that begins on or after September 1, 2015. With respect to disclosures to participants and beneficiaries who enroll in group health coverage other than through an open enrollment period (including individuals who are newly eligible for coverage and special enrollees), the requirements were proposed to apply beginning on the first day of the first plan year that begins on or after September 1, 2015. For disclosures to plans, and to individuals and dependents in the individual market, these requirements were proposed to apply to health insurance issuers beginning on September 1, 2015. Comments received generally supported these applicability dates, except that a number of commenters suggested that the requirements apply with respect to the individual market for coverage beginning on or after January 1, 2016. These final regulations adopt the applicability dates as proposed, except that for disclosures to individuals and dependents in the individual market, the requirements apply to health insurance issuers with respect to SBCs issued for coverage that begins on or after January 1, 2016...."

"[These final regulations] establish that duplicate SBCs do not have to be provided upon application if a previous SBC was provided and there have been no changes to the required information.... These final regulations also provide flexibility in providing SBCs for the situation where a plan has multiple issuers and also adopt the safe harbor for electronic delivery previously set forth in an FAQ, thereby reducing the cost of delivery. These final regulations also require an issuer to provide an internet web address where a copy of the actual individual coverage policy or group certificate of coverage can be reviewed and obtained."

(Internal Revenue Service [IRS]; Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]; Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS])
Amping Up DC Participant Outcomes Through Financial Wellness Initiatives (PDF)
"[P]lan sponsors speculate about the extent to which defined contribution (DC) plan automatic contribution and escalation features create savings that are maintained until retirement or are offset by greater debt elsewhere. This article explores how financial wellness initiatives and automatic features may interact in DC plans and the potential for financial wellness initiatives to boost participants in plans with auto features." (Benefits Quarterly, published by the International Society of Certified Employee Benefit Specialists [ISCEBS])
2015 ACA Reminder: Eligibility Rules Need to Be in Writing with Employer Mandate Now in Play
"[I]f you are modifying your eligibility rules for purposes of the Employer Mandate, you should first update any existing documents (SPDs, employee handbooks, open enrollment handouts, etc.) that contain eligibility language which now explicitly conflicts with the changes. Even if old SPDs or other documents do not have conflicting language, you still should clearly lay out any new eligibility provisions in writing. In addition to complying with ERISA, clearly laying out these new eligibility provisions should help you reduce potential conflicts with employees and risks of litigation, both from employees and the IRS, over who was offered coverage, and who was not." (Fisher & Phillips LLP)
Text of Federal District Court Opinion: Plaintiff Not Entitled to Benefit Described on Distribution Election Form, Where Contrary to Plan Document
"[Plaintiff] argues that the Pension Election Documents should control over the Plan, given the contradictory language and her reliance on the summary documents. In doing so, she relies on a [2003] decision of the United States Court of Appeals for the Third Circuit [('Burstein')] ... Conversely, Defendant rests its case on the Plan language, citing to a recent Supreme Court case, Cigna Corp. v. Amara ... which, inter alia, held that disclosures set forth in the SPD could not be enforced pursuant to ERISA Section 502(a)(1)(B) as terms of the plan itself.... Burstein is no longer good law on the issue of which document controls the availability of benefits, given the Supreme Court's ensuing decision in Cigna." [Keiser v. Conagra Foods, Inc., No.4:13-cv-00159 (M.D. Pa. Oct. 27, 2014)] (U.S. District Court for the Middle District of Pennsylvania)
Lights Out for a 401(k) Fund? Check the Blackout Rules
"Replacement of an investment option or a permanent restriction on new contributions to an investment fund does not, in and of itself, trigger a blackout notice requirement. However, if pursuant to such actions the rights to diversify investments or take loans or distributions are suspended, a blackout notice may be in order." (Mintz Levin)
Do You Need to Send an Annual Notice to Your Defined Contribution Plan Participants?
"[A] table provides a list of the content and deadlines for the most common notices that plan sponsors may need to distribute. It includes: [1] Traditional Safe Harbor 401(k) Notice; [2] Qualified Automatic Contribution Arrangements for a Safe Harbor 401(k) Notice; [3] Eligible Automatic Contribution Arrangement Notice; [4] Qualified Default Investment Alternative Notice (QDIA); [and] [5] Non-Safe-Harbor Automatic Contribution Arrangement Notice." (Alston & Bird LLP)
One in Three Americans Say Guaranteed Income Is Top Retirement Priority
"A new study by TIAA-CREF shows that more than one-third (34 percent) of Americans who participate in a retirement plan say the primary goal of their plan is to generate guaranteed monthly income. Another 40 percent want to ensure their savings are safe regardless of what happens in the financial markets. Yet 72 percent of respondents either do not have or are unaware if their retirement plan has a lifetime income option, which can help provide the retirement security they seek." (TIAA-CREF)
Explaining Shanghai's Health Care Reforms, Successes and Challenges
"With a per capita income almost twice as high as that in the rest of China, Shanghai ... offers its 23.8 million residents a health care system that is the most advanced in China.... Through global budgeting and other reform measures, the system has made great strides in improving its cost-effectiveness. Fundamental to that effort has been a powerful health information technology system that provides both vertical and horizontal integration of patients' medical records." (Health Affairs)
Revised Electronic Disclosure Rules Could Clarify Use and Better Protect Participant Choice
"GAO: (1) examined the extent to which law and regulations permit electronic disclosure to participants; (2) explored the reported advantages and disadvantages associated with electronic delivery; and (3) evaluated the weaknesses identified, if any, in the agencies' electronic delivery requirements.... GAO recommends that Labor and Treasury consider clarifying regulatory requirements and expanding participants' ability to opt out of electronic delivery." (U.S. Government Accountability Office)
[Guidance Overview] Year-End Checklist for Plan Sponsors of Retirement and Group Health Plans
"Over the next few months, employers and plan sponsors will probably focus most of their attention on the changes mandated by the [ACA], for health plans, and the effect of U.S. v. Windsor on both retirement and group health plans. With all the planning, there will hardly be time to keep up with all the normal plan maintenance issues. This article will help ease the transition by serving as a to-do list for plan sponsors in meeting its annual notice obligations and any additional actions that may be required or need to be assessed in the wake of ACA and/or the Windsor decision." (Troutman Sanders)
Coming Soon from a 401(k) Plan Sponsor Near You: A New and Improved Focus on Participant Education
"At the 2013 Annual Meeting of the American Society of Pension Professionals and Actuaries, Rick Rodgers and Susan Simoneaux offered their thoughts on how to create a new and improved emphasis on 401k participant education.... It all begins with the premise that the 401k industry is shifting away from emphasizing investments and back towards emphasizing savings.... 'The primary focus of most participant education is dedicated to the accumulation of assets. When a demographic analysis reveals a large or growing number of participants over age 55, I think it makes sense to include a pre-retirement workshop' [said Rogers]." (Fiduciary News)
Ninth Circuit Reaffirms That Incorporation of SEC Filings by Reference in SPDs Is Fiduciary Act
"On October 23, 2013, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit reissued its opinion in Harris v. Amgen, adding that the incorporation of SEC filings by reference in a summary plan description (SPD) qualifies as an act performed in a fiduciary capacity under ERISA." [Harris v. Amgen, Inc., No. 10-56014 (9th Cir. Oct. 23, 2013)] (Practical Law Company)
[Official Guidance] DOL Technical Release No. 2013-04: ERISA Definition of Marriage Includes Same-Sex Persons Validly Married in State Where Marriage Was Celebrated
"In general, where the Secretary of Labor has authority to issue regulations, rulings, opinions, and exemptions in title I of ERISA and the Internal Revenue Code, as well as in the Department's regulations at chapter XXV of Title 29 of the Code of Federal Regulations, the term 'spouse' will be read to refer to any individuals who are lawfully married under any state law, including individuals married to a person of the same sex who were legally married in a state that recognizes such marriages, but who are domiciled in a state that does not recognize such marriages. Similarly, the term 'marriage' will be read to include a same-sex marriage that is legally recognized as a marriage under any state law.... The terms 'spouse' and 'marriage,' however, do not include individuals in a formal relationship recognized by a state that is not denominated a marriage under state law, such as a domestic partnership or a civil union, regardless of whether the individuals who are in these relationships have the same rights and responsibilities as those individuals who are married under state law." (U.S. Department of Labor)
Text of DOL Amicus Brief to Eighth Circuit Supporting Participant Claim that Insurance Certificate on Web Site Was Not SPD Furnished by Plan Sponsor
"Not only did defendants fail to produce evidence that they had distributed an SPD ... but the document they claim to have provided to Plan participants is a nearly 100 page-long certificate of insurance written in technical terms, which does not qualify as an SPD. Distribution of a full plan policy in lieu of an SPD cannot be justified in light of the basic objective of SPDs to provide 'clear, simple communication' ... Nor does the availability of the certificate on the employer website meet the requirements of the Department's regulation even if the certificate could qualify as an SPD, inasmuch as the governing regulation requires plan administrators to furnish the SPD by a method or methods of delivery likely to result in full distribution to participants." (U.S. Department of Labor [DOL])
[Official Guidance] EBSA Press Release: Labor Department Permits 401(k) Plans to Reschedule Annual Disclosures to Employees (PDF)
"Under the enforcement policy contained in Field Assistance Bulletin 2013-02, plan administrators may reset the deadline one time, for either the 2013 or the 2014 comparative chart, if the responsible plan fiduciary determines that doing so will benefit the plan's participants and beneficiaries and provided that no more than 18 months may pass before participants receive their next comparative chart.... Plans operating on a calendar year had to furnish their first chart no later than August 30, 2012, and their second chart is due no later than August 30, 2013 [subject to the one-time reset permitted under the terms of the Field Assistance Bulletin]. Many other plan disclosures, however, such as pension benefit statements, are disclosed later in the calendar year. Permitting a one-time 'reset' of the deadline will allow plan administrators to align the comparative chart with other participant disclosures." (Employee Benefits Security Administration, U.S. Department of Labor)
[Official Guidance] DOL Field Assistance Bulletin No. 2013-02: Extension of Aug. 30 Deadline for Comparative Chart of Investment Alternatives
"A plan administrator may furnish the '2013 comparative chart' no later than 18 months after the prior comparative chart was furnished as described below. The '2013 comparative chart' is the comparative chart that is due, according to the terms of the final regulation, 'at least annually' after the first comparative chart that was furnished in compliance with the regulation. For example, if a plan administrator furnished the first comparative chart on August 25, 2012, the '2013 comparative chart' would be due no later than August 25, 2013. In accordance with this Bulletin, however, the Department will take no enforcement action based on timeliness if the plan administrator furnishes the '2013 comparative chart' by February 25, 2014." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
The YouToons Get Ready for Obamacare: Health Insurance Changes Coming Your Way
"Join the YouToons as they walk through the basic changes in the way Americans will get health coverage and what it will cost starting in 2014, when major parts of the Affordable Care Act, also known as 'Obamacare,' go into effect. Written and produced by the Kaiser Family Foundation. Narrated by Charlie Gibson, former anchor of ABC's World News with Charlie Gibson and a member of the Foundation's Board of Trustees. Creative production and animation by Free Range Studios." (Kaiser Family Foundation)
[Guidance Overview] Supreme Court Rules Part of DOMA Unconstitutional; Employer Action Steps Suggested
"[T]here are at least five steps that any affected employer should now be considering: [1] Stop imputing income for federal income and FICA tax purposes on health plan coverage provided for a same-sex spouse, but continue imputing income for state income tax purposes if the employee resides in a non-recognizing state; [2] Communicate the Supreme Court's decision to employees, and request that any employees in same-sex marriages that may not be known to the employer identify themselves; [3] Offer a mid-2013 enrollment right under welfare plans for same-sex spouses not previously eligible; [4] Identify all employee plan provisions that may be affected by a changed definition of the term 'spouse'; [and] [5] Identify all past and present employees who are in a same-sex marriage." (The Wagner Law Group)
[Opinion] Testimony to ERISA Advisory Council on Locating Missing Plan Participants
The target page (you'll need to scroll down to locate the particular content) includes the testimony of Allison Klausner, Honeywell, for the American Benefits Council; Richard McHugh, Porter Wright, for the Plan Sponsor Council of America (PSCA); J. Spencer Williams, Retirement Clearinghouse; Ellen Bruce, University of Massachusetts Boston; and Jane Smith, Pension Rights Center. (Employee Benefits Security Administration, U.S. Department of Labor)
[Opinion] Testimony to ERISA Advisory Council on Private Sector Pension De-risking and Participant Protections
The target page (you'll need to scroll down to locate the particular content) includes the testimony of Robert Newman, Covington & Burling LLP; Steve Keating, Penbridge Advisors; Evan Inglis, Vanguard; Craig Rosenthal, Mercer, for the American Benefits Council; John Ferreira, Morgan Lewis; Jack Cohen, Association of BellTel Retirees; and Ilana Boivie, Communications Workers of America. (Employee Benefits Security Administration, U.S. Department of Labor)
[Opinion] Testimony to ERISA Advisory Council on Successful Retirement Plan Communications for Various Population Segments
The target page (you'll need to scroll down to locate the particular content) includes the testimony of Donn Hess, JP Morgan, for the American Benefits Council; Linda Jacobsen and Donna MacFarland, Lincoln Financial; Jennifer Benz, Benz Communications; Lori Lucas, Callan Associates; Beth Boden, Aon Hewitt; and Morgan Gold, Catherine McCabe, and David Richardson, TIAA-CREF. (Employee Benefits Security Administration, U.S. Department of Labor)
[Guidance Overview] Treatment of ACA Whistleblower Complaints (PDF)
"[T]he relationship between the employee's receipt of a subsidy and the potential tax penalty imposed (section 4980H) on an applicable Large Employer could create an incentive for the employer to retaliate against an employee.... [Therefore,] Applicable Large Employers may consider taking the following actions early to minimize or avoid the likelihood of causing retaliatory complaints by employees:" (Chao & Company, Ltd.)
[Guidance Overview] DOL Regulatory Agenda Released (PDF)
The U.S. Department of Labor has published the Fall 2012 issue of its regulatory agenda, which lists the regulations under active consideration for publication, proposal or review during the next 12 months. (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
[Official Guidance] U.S. Department of Labor Issues Compliance Guidance for Employee Benefit Plans in Wake of Hurricane Sandy
"The guidance provided in this statement applies to employee benefit plans, plan sponsors, as well as service providers to such employers, located on October 26, 2012 in one of the counties or Tribal Nations that have been identified as covered disaster areas because of the devastation caused by Hurricane Sandy.... The Department recognizes that some employers and service providers acting on employers' behalf, such as payroll processing services, located in designated affected areas will not be able to forward participant payments and withholdings to employee pension benefit plans within the prescribed timeframe. In such instances, the Department will not, solely on the basis of a failure attributable to Hurricane Sandy, seek to enforce the provisions of title I with respect to a temporary delay in the forwarding of such payments or contributions to an employee pension benefit plan to the extent that affected employers, and service providers, act reasonably, prudently and in the interest of employees to comply as soon as practicable under the circumstances." (Employee Benefits Security Administration)
Election Brings Increased Clarity to HR Agenda
"For employers, President Obama's victory hopefully brought clarity in several key areas, especially issues surrounding healthcare reform and workplace issues involving National Labor Relations Board, Equal Employment Opportunity Commission and Americans with Disabilities Act regulations, among others.... [A]mong the major changes set for 2014 is the requirement that employers of more than 50 people provide health insurance or pay a tax penalty." (Human Resource Executive Online)
Sixth Circuit Finds ERISA Section 510 Does Not Protect Unsolicited Internal Complaint (PDF)
"The question in this case is whether [ERISA section] 510 extends its protections to an employee's unsolicited, internal complaint to his employer that it has violated ERISA.... The Sixth Circuit has not yet had occasion to address the issue..... [T]he Court concludes that in this case Section 510 does not protect the plaintiff's unsolicited, internal complaint -- an email to his employer threatening to report its ERISA violations to state and federal authorities -- because it was unconnected to any 'inquiry or proceeding'.... A fuller explanation is that 'an employee's grievance is within Section 510's scope whether or not the employer solicited information,' provided that the employee himself solicited information. Without the asking for information, there is no 'inquiry'." [Sexton v. Panel Processing, Inc., No. 12-10946 (6th Cir., Oct. 30, 2012)] (U.S. Court of Appeals for the Sixth Circuit)
Miller Chevalier Focus on Employee Benefits, October 24, 2012
This issue includes: Health and Welfare: Upcoming Healthcare Reform Deadlines and Effective Dates; Qualified Plans: Upcoming Amendment and Disclosure Deadlines; Executive Compensation: Section 409A: Relief Period for Release-Contingent Payments Coming to a Close. (Miller & Chevalier)
Before It's Too Late: A Retirement Security Newsletter from Phyllis Borzi, April 29, 2013
"'The Retirement Gamble' took a look at some of the reasons so many Americans are financially unprepared for retirement.... [M]uch of the program is spent profiling regular Americans who are trying to get by and doing the best that they can to prepare for an uncertain future. The show clearly outlines the challenges faced by people trying to navigate an opaque, fractured, and confusing system." (U.S. Departments of Labor)
[Guidance Overview] DOL Updates Employer Model CHIP Notice
"The US Department of Labor (DOL) has updated its model notice that employers with group health plans may use to notify eligible employees about premium assistance available through their state Medicaid or Children's Health Insurance Program (CHIP). Employees must receive this information before the start of the plan year. Employers may use the DOL model or create their own notices, which must include program contact information for the states where employees reside. As revised July 31, the DOL notice now contains information for 38 states -- two fewer than the initial 2010 model listed." (Mercer)
Reinhart Employee Benefits Update, August 2012 (PDF)
Articles include: HHS Releases Additional FAQs on Medical Loss Ratio Requirements; HHS Issues Audit Protocol for HIPAA Compliance as Mandated by HITECH Act; DOL Revises Mailing Address and Electronic Filing Method for Plan Fiduciaries to Report Disclosure Failures by Covered Service Providers; IRS Issues FAQs on Notice Requirements for Benefit Restrictions for Single-Employer Defined Benefit Plans; DOL Issues Revised Guidance Regarding Participant-Level Fee Disclosures. (Reinhart Boerner Van Deuren s.c.)
Can Index Funds Fix Your 401(k) Fee Problem?
"[I]t's hard to convince people that index funds are a better deal. Studies repeatedly show that people think higher fees buy better performance.... For better or worse, 401(k) fee costs are more a function of size: how big a plan is, how big the average contribution is, and how big the plan funds are. Large plans, which the PSCA defines as 5,000 or more participants, pay sharply lower 'institutional' fees than smaller plans pay." (U.S. News & World Report)
Employee Job Satisfaction Linked to Benefits Education
"More than one-quarter of employed adults say that morale has declined in last year. And a majority of employees would bolt their current employer if offered comparable pay and benefits elsewhere, according to a new report." (Treasury & Risk)
[Official Guidance] Text of IRS Notice 2012-46: Notice Requirements Under Section 101(j) of ERISA for Funding-Related Benefit Limits in Single-Employer Defined Benefit Pension Plans (PDF)
"This notice provides guidance in the form of questions and answers with respect to the notice requirements of section 101(j) of [ERISA], which requires that notice be provided to participants and beneficiaries relating to certain limitations on benefits in pension plans imposed under section 206(g) of ERISA, as added by the Pension Protection Act of 2006 ... This notice is effective on ... [the first day of the first calendar month following 90 days after publication of this document in the Internal Revenue Bulletin; it is scheduled to appear in IRB 2012-30, which will be dated July 23, 2012]. However, the plan administrator may rely on the provisions in this notice before that date. The plan administrator may also apply a reasonable interpretation of section 101(j) of ERISA before that date." (Internal Revenue Service)
A 14-Month Effort to Answer One Question: Can Shopping for Insurance Be Easy?
"Right now, buying health insurance is anything but. Americans find it one of the most difficult things to purchase. Every year, branding firm Seigel + Gale ranks industries by 'brand simplicity,' a measure of how easily consumers understand the product being sold. Every year, health insurance comes in at the very bottom. Eight foundations came together about a year ago, aiming to fix that." (The Washington Post; free registration required)
Second Look at Headline Grabbing 401(k) Fee Survey Reveals Major Questions
"Several of the articles ... despite the grave headlines, began to isolate some of the cracks in the analysis. The Demos report referenced data from both the Investment Company Institute, a national trade association located in Washington D.C. that represents mutual funds and other registered funds and which regularly surveys 401k plans using mutual funds, and BrightScope, Inc., a 401k rating firm located in San Diego. Both groups took exception to the report's use of their data." (Fiduciary News)
[Guidance Overview] On 401(k) Plan Brokerage Windows and Participant Fee Disclosures (PDF)
"No doubt these 'last minute' rules have surprised many plan administrators and service providers. ? As compliant disclosures for brokerage window fees are being finalized, plan administrators and service providers should seek to demonstrate that initial disclosures have been prepared based on a reasonable interpretation of the 404a-5 regulations, consistent with the good faith standard included in FAB 2012-02, Q&A # 37." (Kelly, Hannaford & Battles P.A.)
[Guidance Overview] 2012 W-2 Reporting of Health Care Coverage Costs
"The IRS has issued Notice 2012-9 providing W-2 reporting requirements for 2012 W-2 forms ... The IRS is providing reporting transition relief for: 1) employers who will file less than 250 W-2 forms in the prior calendar year, 2) stand alone dental/vision plans, 3) health reimbursement arrangements, 4) multiemployer plans, 5) self-insured plans that are not subject to COBRA (i.e. church plans), 6) relief with respect to certain forms W-2 furnished to terminated employees before the end of the year, and 7) certain employers with respect to coverage under an employee assistance program, on-site medical clinic or wellness program.... Below is a chart that outlines the provisions of Notice 2012-9." (TRI-AD)
[Guidance Overview] Employee Benefits Developments, May 2012
Covers recent rulings, opinions, and cases. Articles in this issue include: Release Protects TPA From Negligent Misrepresentation Claim; Estate May Sue to Enforce Waiver and Recover 401(k) Benefits; Separation Policy Benefit Is Not an 'Early Retirement Subsidy' Subject to QDRO; Employer Is Not Liable for Allegedly Ambiguous Summary Plan Description; Acquired Employees Were Properly Denied Shutdown Benefits; PBGC Asserts Liability Against Foreign Control Group Member; Court of Appeals Holds That Union May Be Required to Reimburse Employer for Withdrawal Liability Associated With Multiemployer Plan. (Hodgson Russ LLP)
[Guidance Overview] May 11 FAQs Provide Additional Guidance on SBCs
"Here are some of the topics which are addressed: FAQ 1: Expanding on the circumstances in which an SBC may be provided electronically (discussed in a previous FAQ), the DOL has added a new safe harbor for providing SBCs electronically to participants and beneficiaries in connection with their online enrollment or online renewal of coverage under the plan. FAQ 7: The DOL clarifies that it is permissible to 'combine' SBCs or SBC elements to provide a side-by-side comparison to facilitate comparisons of different benefit package options by individuals shopping for coverage." (Faegre & Benson LLP)
DOL in Fee Disclosure Guidance on Brokerage Windows Is 'Surprising', Experts Say
"Question 30 asks whether an investment platform offered by a retirement plan is considered a designated investment alternative when the platform includes many registered mutual funds of multiple fund families to which participants and beneficiaries may direct the investment of assets held in or contributed to their individual accounts. It adds that although the plan fiduciary selected the platform provider, the fiduciary did not designate any of the funds on the platform as 'designated investment alternatives' under the plan. The DOL responded by saying that although the regulation does not specifically require a plan to have a particular number of designated investment alternatives, the failure to designate a manageable number of investment alternatives raises questions as to whether the plan fiduciary has satisfied its obligations under section 404 of [ERISA]." (planadviser)
Public Sector Defined Contribution Plans: Rising to the Challenge of the New Fee Disclosure Requirements
"According to the NAGDCA DC Survey about two-thirds (64.7%) of plan sponsors said they have or will develop a communication regarding plan fees, 25% were not sure, and 10% did not intend to (presumably relying on an outside source for this). More than a third (38.6%) said they didn't know whether such disclosures would cause participants to migrate to lower cost options, but the majority thought the disclosures would not result in a change to the fund lineup or a change to the fee structure. More than three quarters (77.9%) believed that their plan providers would comply with the new DOL regulations regarding fee disclosure for their non-ERISA plans, while the remaining (22.1%) were unsure." (National Association of Government Defined Contribution Administrators)
[Guidance Overview] DOL FAQs Address Implementation of Participant-Level Fee Disclosures
A detailed overview of the May 7 FAQs, nicely organized by topic. (Proskauer)
[Official Guidance] DOL Reopens Comment Period for Target-Date Fund; Invites Comments on SEC Study (PDF)
"In November 2010, the [DOL] published a proposal to amend its qualified default investment alternative regulation (29 CFR 2550.404c-5) and participant-level disclosure regulation (29 CFR 2550.404a-5). The comment period for the proposal originally closed on January 14, 2011. The proposal includes more specific disclosure requirements for TDFs, based on evidence that plan participants and beneficiaries would benefit from additional information concerning these investments.... As part of its regulatory process, the [SEC] recently engaged a consultant to conduct investor testing of comprehension and communication issues relating to TDFs. A report presenting the findings of this research on individual investors' understanding of TDFs and related fund advertisements is publicly available on the [SEC web site at].... [DOL] invites additional comments on the TDF proposal in light of this new research." (Employee Benefits Security Administration)
[Guidance Overview] Compliance Checklist 2012 for ERISA-Covered Defined Benefit Plans, Defined Contribution Plans and 403(b) Plans(PDF)
Very nice 42-page chart. (Prudential)
[Guidance Overview] Compliance Checklist 2012 for Non-ERISA Plans: Qualified Governmental and Nonelecting Church Plans, Non-ERISA 403(b) Plans, 457 Plans and Nonqualified Executive Benefit Plans (PDF)
Very nice 16-page chart. (Prudential)
[Guidance Overview] DOL Makes Small Changes to Field Assistance Bulletin 2012-02 (Participant Disclosure FAQs)
"DOL revised its response to Q-19 regarding website performance information, making clear that a website in connection with a variable return DIA should be updated to show 1-, 5-, and 10-year performance information for the period ending on the most recently completed calendar quarter." (Groom Law Group)
[Guidance Overview] Plan Sponsors Working Diligently and in Good Faith on Summary of Benefits and Coverage Will Not Face Penalties During First Year
"The Departments will not impose penalties for failure to provide an SBC or Uniform Glossary on plans and issuers that are working diligently and in good faith to comply.... Plan sponsors with 'carve-out' arrangements, such as a carved-out outpatient prescription drug program or mental health program, may provide multiple partial SBCs during the first year, as long as the multiple SBCs together provide all relevant information to meet SBC content requirements.... The Departments will not enforce penalties for failure to provide an SBC with respect to expatriate coverage during the first year of applicability." (The Segal Company)
[Guidance Overview] Court of Appeals Rejects Equitable Remedies When SPD Promises More Generous Benefits Than Pension Plan Document
"In some ways, the Ninth Circuit's recent decision in Skinner v. Northrop Grumman Retirement Plan B is a garden-variety example of a classic fact pattern: the terms of a summary plan description ('SPD') promise better benefits than the plan document it summarizes, and participants sue for the difference. Skinner demands our attention, however, because it is the first decision by a federal court of appeals to interpret the Supreme Court's most recent high-profile decision on ERISA remedies: CIGNA Corp. v. Amara." (Spencer Fane)
[Opinion] Text of Morningstar Comment Letter to SEC on Need for More Disclosure to Investors in Target-Date Funds
"Target-date funds are quickly becoming Americans' primary -- if not only -- retirement-savings tool, so it's critical that investors understand how these dynamic funds are run. Also, plan sponsors, researchers, and fiduciaries need more data to evaluate target-date series side by side. Morningstar's specific suggestions for how to improve the funds' disclosure follows in the text of the letter." (Morningstar)
[Guidance Overview] EBSA Makes Small Clarifying Correction to FAB 2012-02 FAQs on Participant-Level Fee Disclosure
From an EBSA email distributed on May 17: "The Department of Labor's Employee Benefits Security Administration made a technical correction to recently released Field Assistance Bulletin No. 2012-02, which contains frequently asked questions and answers about the Department's participant-level fee disclosure regulation (29 CFR section 2550.404a-5). It has come to the Department's attention that, as initially released on May 7, 2012, a sentence in the answer to Question 19 concerning quarterly Web site updates to 'average annual total return' information inadvertently referred to the most recently completed calendar 'year' rather than the most recently completed calendar 'quarter.' The Department corrected this error on May 17, 2012 in order to accurately restate the requirements of the regulation. The word 'calendar' also was removed from the phrase '... 10-calendar year periods ...' in the same sentence. See Q-19, n.2." (Employee Benefits Security Administration)
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